|Abhijit Lele / Mumbai March 01, 2021
Aditya Birla Finance Limited (ABFL) has plans to raise Rs 5,000 crore with the economy returning to the track of improvement. This will help the company achieve 15–17 per cent growth over the next three years. The company expects that the share of SME and retail sector will increase to 65 per cent in the next three years from 60 per cent in December 2020.
Apart from ABFL, its subsidiary Aditya Birla Housing Finance Limited is planning to raise Rs 1,140 crore through non-convertible debentures. ABFL and ABHFL are subsidiaries of BSE-listed Aditya Birla Capital Limited. ABFL managing director and CEO Rakesh Singh said that loan growth is expected to be 5 to 6 percent this year. The first half of the current financial year was completely under lockdown. After the economy comes out of lockdown and the situation is back to normal, businessmen are looking to achieve better growth. This is the reason that plans to raise funds are now being prepared. Rating agency Icra has given ‘AAA’ rating to the proposed debentures of the two companies. The agency has also given ‘AAA’ rating for the bank-line. This rating confirms the quality of business in a difficult scenario. Singh said that the last one year has been an environment of great uncertainties. The total borrowings of the company, including housing, stood at Rs 57,522 crore as of December 31, 2020. SMEs and retail (including housing) accounted for 60 per cent of this. NBFCs had a loan account of Rs 45,650 crore and a capital adequacy ratio of 23.2 per cent. According to the analyst presentation, HFC had a loan account of Rs 11,872 crore and a capital adequacy ratio of 19.4 per cent. Singh is also a director on the board of HFC. The company is focusing on expanding into the Tier 3, 4 and 5 markets and added 34 new locations during the third quarter. The company plans to add 25 new locations to its network during the fourth quarter ended March 2021. The company’s growth will continue to gain momentum mainly from retail and SMEs.
Referring to the interest rate trends and the cost of the fund, Singh said that if you look at the returns of government bonds, you will find that it has started picking up. This probably indicates that the low interest rate phase is now in its final stages. He said, “There may be a strengthening of rates from here, but given the attitude of the Reserve Bank of India on the cash and adjustment front, we cannot expect that the rates will increase significantly.”